Republican Senators Push False Argument That Payroll Tax Cut Will Undermine Social Security

[ProSense]

Republican Senators Push False Argument That Payroll Tax Cut Will Undermine Social Security

By Travis Waldron

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The latest argument to emerge from the GOP has been that extending the payroll tax cut would undermine Social Security, since payroll tax revenue goes directly into the Social Security Trust Fund. Multiple Congressional Republicans have adopted that theory of late, including South Carolina Sen. Jim DeMint (R), who put it to use on CNBC last night:

DEMINT: Republicans are always ready to cut taxes, as you know. We don’t think it’s a good idea to do it by raiding Social Security.

Kentucky Sen. Rand Paul (R) made the same argument on Fox News earlier in the day:

PAUL: Well, you know, Social Security is $6 trillion short of money. So the president is advocating reducing the amount of funding to Social Security when they’re already $6 trillion short. So it doesn’t really make any sense and it really argues that he’s going to bankrupt Social Security even quicker by reducing it’s funding.

Watch a compilation:

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That argument, which has been adopted by members of both parties and perpetuated by news outlets like NPR, has one problem: it’s not true. Each of the plans under consideration is fully paid for, replacing revenue the Social Security Trust Fund would have lost from lower payroll tax receipts with money made up from either alternative revenue sources or spending cuts. The earlier payroll tax holiday, set to expire this month, was also fully-funded, and the program has thus far “been held harmless” from the holiday, as Reuters noted today....Social Security actually has a $2.6 trillion surplus and is solvent through at least 2037.

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UPDATE Stephen C. Goss, the Chief Actuary of Social Security, said today that the Social Security Trust Fund “would be unaffected by enactment” of a payroll tax cut extension, according to a statement circulated by Sen. Bob Casey (D-PA). The Congressional Budget Office agreed, saying all lost revenue would be offset.

UPDATE Joe Sonka, a reporter for LEO Weekly in Louisville, Kentucky points out that in addition to means testing, Paul has also supported privatizating Social Security and called it a Ponzi scheme, making his strident defense of the program now seem even more insincere.

[wryter2000]

1. While I have no love of those R idiots...

They're working with a teeny-tiny kernel of truth. Yes, the losses are offset from general funds, but this means that Social Security actually is part of the regular budget. It is contributing to the deficit where it wasn't before. It was more secure when it was kept separate.

I don't know that's any reason not to have the cut or not to extend it, but it's worrisome.

[ProSense]

2. No

"They're working with a teeny-tiny kernel of truth. Yes, the losses are offset from general funds, but this means that Social Security actually is part of the regular budget. It is contributing to the deficit where it wasn't before. It was more secure when it was kept separate."

...the kernel doesn't exist, and that point is completely inaccurate. The nature of Social Security is unchanged.

[RC]

4. The point is completely accurate

The nature of Social Security funding is fundamentally changed.
It will be tied to the congressional budget, subject to the whims of whoever is in control.
Between the Republicans and the DINO's, you could end up paying for a dead horse because S/S could possibly not exist because of lack of funds when you retire. Is that what you want?

[TheWraith]

6. There is no "fundamental change." That's purely Republican talking points. nt

[ProSense]

7. Absolute

The point is completely accurate The nature of Social Security funding is fundamentally changed.
It will be tied to the congressional budget, subject to the whims of whoever is in control.
Between the Republicans and the DINO's, you could end up paying for a dead horse because S/S could possibly not exist because of lack of funds when you retire. Is that what you want?

...nonsense. By that logic, Republicans were right all along by claiming that Social Security adds to the deficit.

After years of claiming that the government is raiding (or even wiping out) the trust fund with IOUs, why is this initiative suddenly being portrayed as damaging? Unlike raiding the trust fund, this is a much-needed relief program that does not impact Social Security funds.

What's the point of hyping speculation about what Republicans might do in the future by misrepresenting an initiative that preserves Social Security?

If $1 is collected instead of $1.25, the fund gets the full $1.25. That has nothing to do with the structure of Social Security related to the budget or deficit.

Dean Baker, September: The Payroll Tax Cut Did Not Cost Security Revenue

The NYT wrongly told readers that the payroll tax cut cost Social Security, "resulted in $67.2 billion of lost revenue for Social Security in 2011." This is not true. The tax cut was fully offset by money from general revenue so that the trust fund was unaffected by the tax cut.

The fund is "unaffected." The nature of Social Security does not change. Stop pushing the lie!

Still, for those who feel compelled to help the Republicans out with their RW argument, try adding a progressive counter in with the concern.

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That aside, Sargent has another point, that this is another set up from Republicans to argue that it's the Democrats who are trying to undermine Social Security, and that they, the Republicans, who are the true defenders of the program.

Well, here's a suggestion to combat that, and to actually strengthen Social Security in the long run. Democrats should embrace this new found concern among Republicans for the program, and up the ante by coupling the payroll tax holiday with lifting the payroll tax cap. Right now, income over $110,000 is exempt from the payroll tax. Do away with that cap, and you help make sure that the lowered contributions from people who will never have more than $110,000 in income in a year don't get hit now. It's a win-win.

[wryter2000]

12. From your own post

The tax cut was fully offset by money from general revenue so that the trust fund was unaffected by the tax cut.

Therefore, Social Security is now dependent on a certain amount of money out of the normal budget. Before, the Social Security Trust Fund was entirely separate. It never needed general revenue money and therefore didn't contribute to the general revenue deficits. Now, to a small extent, it does.

[ProSense]

16. No

The tax cut was fully offset by money from general revenue so that the trust fund was unaffected by the tax cut.

Therefore, Social Security is now dependent on a certain amount of money out of the normal budget. Before, the Social Security Trust Fund was entirely separate. It never needed general revenue money and therefore didn't contribute to the general revenue deficits. Now, to a small extent, it does.

...it's a one time arrangement. You're implying that replacing the funds changes the fact that Social Security by law is a self-funding entity. It's on the government to replace the funds to satisfy the arrangement. It has nothing to do with Social Security's structure.

[wryter2000]

13. I'm hugely in agreement with the second half of your post

I'm not even against the payroll tax holiday necessarily. I do think it's setting a dangerous precedent to make Social Security in any way dependent on anything besides what comes out of the Social Security Tax box on your W2.

Lifting the cap would do more than enough to make up for the payroll tax holiday, and we wouldn't need general revenue funds.

[jefferson_dem]

17. So the Trust Fund is good...you're just concerned about how it was made good?

Oh... Please.

[wryter2000]

10. Is the money being made up from the general fund or not? n/t

n/t

[jefferson_dem]

15. Truth. The SS Trust Fund is just as healthy now as before the payroll tax cuts were extended.

Anyone who pretends otherwise is ... not accurate.

[denverbill]

3. Well the Bush tax cuts undermined the country's credit rating, and they gave a rat's ass about that.

[JoePhilly]

5. If they were true to their beliefs, they would cheer that ... dopes.

[jenmito]

8. Sen. Manchin, Dem., was on MSNBC with Repub. Sen. Kirk, both saying they'll vote against it using

this very lie as the reason..

[Martin Eden]

9. Trying to have it both ways

The R's are trying to have it both ways, because they have always lumped Social Security in with the general funds when talking about deficits and "entitlement" spending. Now they're opposing an extension of the payroll tax cut on the basis it defunds SS.

But the D's are also trying to have it both ways now by putting forth the argument that reducing the taxes paid into the SS Fund will be offset by revenue increases elsewhere in the budget.

So, which is it? Is SS a stand-alone program that is solvent for another 30 years or so and solvent indefinitely if the cap on income is lifted, or do we mix SS funds in with everything else?

The fact is there hasn't been a "lock box" for SS since it was raided to pay for the war in Vietnam, but we have to ask ourserlves if we really want to go down the road of endorsing the concept that SS funds are fungible with other expenditures and revenue sources.

[ProSense]

11. Except

The R's are trying to have it both ways, because they have always lumped Social Security in with the general funds when talking about deficits and "entitlement" spending. Now they're opposing an extension of the payroll tax cut on the basis it defunds SS.

But the D's are also trying to have it both ways now by putting forth the argument that reducing the taxes paid into the SS Fund will be offset by revenue increases elsewhere in the budget.

So, which is it? Is SS a stand-alone program that is solvent for another 30 years or so and solvent indefinitely if the cap on income is lifted, or do we mix SS funds in with everything else?

...Democrats have never argued that the fund shouldn't be replenished. Nor have they ever argued that raiding the fund links Social Security to budget. Raiding the fund would simply deplete it, and is egregious, but the program's structure is codified by law. People pay into the fund, and any approved arrangement, such as the temporary tax holiday, is on the government, not the beneficiaries.

[Martin Eden]

18. Except that's not the argument put forth in the OP

"replacing revenue the Social Security Trust Fund would have lost from lower payroll tax receipts with money made up from either alternative revenue sources or spending cuts"

So is that "money made up" going to be placed directly into the SS fund?

If so, that's mixing SS funds with general revenue, and it can be argued by the other side that what can go in can also come out.

If not, then it is an egregious "simple depletion" that is not made up after all.

[ProSense]

19. Wait

"replacing revenue the Social Security Trust Fund would have lost from lower payroll tax receipts with money made up from either alternative revenue sources or spending cuts"

So is that "money made up" going to be placed directly into the SS fund?

If so, that's mixing SS funds with general revenue, and it can be argued by the other side that what can go in can also come out.

If not, then it is an egregious "simple depletion" that is not made up after all.

...what's with the idea of "mixing" money, and what does it have to do with the structure of Social Security?

Borrowing money from Social Security and then replenishing it, does not change the structure of the program.

[Martin Eden]

20. How is it being replenished?

From what source of revenue, if not payroll taxes designated for SS, is the fund being "replenished"?

I asked you a direct question about the "money made up" because I don't know exactly what you mean by that, and you have not answered.

The "mixing" (or lumping together) of money (revenues & deficits, including SS) has been the R's framing of the issue all along. They dismiss the solvency of the SS Trust Fund by lumping the payroll taxes together with all revenue and talking about SS payments to retirees (current and future) in the context of the larger deficit issue. They conveniently ignore the "structure of the program" you refer to.

In the current political battle over taxes -- AND DEFICITS -- is the president or is he not arguing that SS revenues lost by extending the payroll tax cut will be "made up" by increasing revenues from other sources? Is that or is that not an argument that justifies the lost SS revenue by balancing it with increased revenue elsewhere -- ALL WITHIN THE LARGER CONTEXT of budget deficits?

If so, then it fits into the R's framing of the issue, blurring the distinction between SS funds and commitments with general revenues and expenditures and deficits.

[ProSense]

21. This

The "mixing" (or lumping together) of money (revenues & deficits, including SS) has been the R's framing of the issue all along. They dismiss the solvency of the SS Trust Fund by lumping the payroll taxes together with all revenue and talking about SS payments to retirees (current and future) in the context of the larger deficit issue. They conveniently ignore the "structure of the program" you refer to.

...is going around in circles. Yes, that has always been the RW spin, but it's bogus. So why are people trying to argue it now?

[Martin Eden]

22. That's what I'd like to know

Why is the president and those who support the payroll tax cut arguing the shortfall can be made up with revenues from other sources?

I'm not the one lumping together SS funds with other revenues, expenditures, and the overall deficit equation.

My entire line of argument here is to caution against doing that.

[ProSense]

23. The

"Why is the president and those who support the payroll tax cut arguing the shortfall can be made up with revenues from other sources?"

...President isn't supporting that argument. You are, as evidenced above, along with the Republicans.

[Martin Eden]

24. Sorry, No

You and the president are allowing that argument to be made by those who would destroy Social Security.

That is evidenced by your inability to answer my question about where the lost revenues are coming from and, most importantly, HOW revenues from other sources will be added to the SS Fund. IMO it is vitally important to keep both SS revenues and expenditures separate from other revenues and expenditures. The structure of the program has to be removed from the general equation of budget deficits.

I'm not opposed to a payroll tax cut -- IF it is made up by lifting the income cap on contributions. THAT is where the Social Security equation has to be balanced -- NOT by spending cuts and tax increases elsewhere. Spending cuts and tax increases elsewhere are part of the equation to reduce the deficit, independent of Social Security. Mixing the two is opening a door to lumping SS in with the rest of the budget, and THAT is the beginning of Social Security's demise.

[ProSense]

25. No

Sorry, No

You and the president are allowing that argument to be made by those who would destroy Social Security.

That is evidenced by your inability to answer my question about where the lost revenues are coming from and, most importantly, HOW revenues from other sources will be added to the SS Fund. IMO it is vitally important to keep both SS revenues and expenditures separate from other revenues and expenditures. The structure of the program has to be removed from the general equation of budget deficits.

I'm not opposed to a payroll tax cut -- IF it is made up by lifting the income cap on contributions. THAT is where the Social Security equation has to be balanced -- NOT by spending cuts and tax increases elsewhere. Spending cuts and tax increases elsewhere are part of the equation to reduce the deficit, independent of Social Security. Mixing the two is opening a door to lumping SS in with the rest of the budget, and THAT is the beginning of Social Security's demise.

...you're projecting. It has been stated repeatedly that the funds will come from the general fund. The point has been made repeatedly that it does not change the structure of Social Security, but you keep insisting that it does. You are the one arguing that the Republicans are right, not me.




Edited for clarity.

[Martin Eden]

26. Then how do you explain this:

"Each of the plans under consideration is fully paid for, replacing revenue the Social Security Trust Fund would have lost from lower payroll tax receipts with money made up from either alternative revenue sources or spending cuts."

Stating it repeatedly only proves my point -- the "general fund" and the Social Security Fund are being mixed. Do you think that can only go one way -- adding to the SS equation but never subtracting from it?

The Republicans are hypocrites because they always wanted it one way and now they're arguing the other. Now YOU are trying to have it both ways by saying Social Security can be bolstered from the general fund. I bolded replacing revenue above because that "revenue" is not taxes specifically dedicated to Social Security -- but is being tied to it as part of an overall budget deficit equation!!!

You and I can argue this back and forth ad infinitum ad nauseum, but the bottom line is that once Democrats go down the road of tying SS revenues in with general revenues they have played right into the hands of those who want to destroy the program.

I'm done. You can have the last word if you like.

[ProSense]

27. Well,

Then how do you explain this:

"Each of the plans under consideration is fully paid for, replacing revenue the Social Security Trust Fund would have lost from lower payroll tax receipts with money made up from either alternative revenue sources or spending cuts."

...Republicans have been know to lie

"but is being tied to it as part of an overall budget deficit equation!!!"

No it isn't, no matter how often you repeat it.

That's like a guy borrowing $50 from you, giving it back, and then maintaining that every $50 he sees you with came from him.

Replenishing the fund does not mean Social Security becomes tied to the budget.

[jefferson_dem]

14. Sadly, it's not just Republican Senators who are pushing that false argument.

Look around here...

Strange bedfellows once again. :crazy:

[Hell Hath No Fury]

31. Uh, you are aware that MANY DUers were --

warning of this tax cut being a potential problem since the very beginning, long before the GOPers decided they needed a political argument they could make to cover their asses?


And yes, it IS a problem for SS, and not some "false argument".

[wryter2000]

32. Exactly

Until this tax cut, the argument that SS contribute to the deficit have been bogus. The only money paid out came from payroll taxes. Now, the SS fund is in part dependent on general revenue.

That may not be a strong enough reason not to have a payroll tax cut, but we have to face the reality that this can cause a problem for SS, both real and political, in the future.

I sincerely hope they find some other way to make up the revenue, such as raising the payroll tax cap.

[ProSense]

33. Wrong

"Until this tax cut, the argument that SS contribute to the deficit have been bogus. The only money paid out came from payroll taxes. Now, the SS fund is in part dependent on general revenue."

...it's still bogus, and no it isn't. There has been no law signed that changes the structure of Social Security.

The government, with the approval of Congress, borrowed from the Social Security fund, and paid it back. That is the only thing that happened.

[MFrohike]

28. The undermining isn't the funding

This is undermining it politically. Ever wonder why such a regressive means is used to fund Social Security? It's to prevent it from being "just another program." FDR wanted, and fought for, the payroll tax because it established clear and unambiguous ownership in the program by each contributor. That ownership is beginning to be blurred and it will be very troublesome.

[Name removed]

29. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ProSense]

30. Well,

"You are one tough ..."

...if from sticking to fact as opposed to knee-jerk anti-Obama sentiments.